Riding the waves of change: how British TV can be stronger together

Speech by Sharon White to the Freeview/Digital UK conference, 28 November 2018.

Introduction

Good morning.

I am delighted to be here.

I understand that the first film ever shown behind me, in 1975, was an early screening of Jaws. Hopefully my speech won’t give you nightmares.

In fact, I want to strike a note of cautious optimism.

Because against a backdrop of unprecedented technological change, our industry is finding ways to thrive in the digital age.

Today I want to explore how – by embracing that change together – UK broadcasters can reach more audiences than ever before.

The wider climate

First, let’s remind ourselves how we got here. How binge-watching became a verb; YouTube viewing rose to a billion hours per day; and a DVD postal service from Scotts Valley became a streaming giant with 140 million customers.

Clearly, for companies like Netflix, technology matured at just the right time. Superfast broadband and smartphones opened up cheap, universal distribution, with little or no regulation.

Years of low interest rates have allowed tech firms to grow and invest through debt finance. Netflix, which now has $5bn of net debt, was able to spend almost $8bn on content last year – more than twice the combined spending by PSBs on UK shows.

Everyone is forced to respond – even the big established players in mature markets. Disney has bought Fox, Comcast has acquired Sky, with both now targeting living rooms outside their home markets.

Facebook, Google, Amazon and Apple are all commissioning original content. Disney Plus is on the horizon, with a $100m budget for a single series of Star Wars.

‘Cord cutting’ is no longer just a US phenomenon. In the UK, for the first time ever last year, the amount spent on traditional pay TV fell, and the number of subscriptions was overtaken by the streaming services.

So traditional television is fighting on two fronts: economic and technological change. And the pace of change isn’t slowing.

We know younger viewers are increasingly tuning out of real-time TV played to a fixed schedule. TV viewing is still holding up well among older viewers – the age of the average BBC viewer is nearing 60. But among children viewing fell 15% last year.

We see a similar trend among young adults. 16-34s still spend almost five hours in front of a screen each day; but less than half of that is watching TV. Most viewing is on portable devices, including a full hour on YouTube.

TV viewers now take for granted vast choice, cinematic budgets and visuals.

Soon they will be offered even more content over their broadband line, funded by a sea of money from online giants.

Technology will continue to reshape our viewing in ways that are hard to predict.

And the disrupters of today will be disrupted tomorrow.

Who would bet against Netflix in time being overtaken by a new pretender?

Change brings opportunity. And nowhere is that truer than in UK television.

This year Ofcom has been encouraging UK broadcasters to collaborate to compete. Pulling together to increase their collective strength.

Harnessing the power of technology to capture the audiences who have moved online.

I remain convinced that collaboration is vital to the success of our industry.

Today I want to expand on two specific areas where I believe it has a vital opportunity to flourish: programmes, and distribution.

The future is local

Let’s start with the most important thing: the programmes.

What matters to viewers are gripping stories that speak to their lives and experiences. And no-one is better at producing them than UK broadcasters.

Just look at the brilliant slate of programmes in recent months – Unforgotten, Killing Eve, Bodyguard and No Offence.

Audiences tell us what they most want are original, UK-produced shows – that portray them and their communities in an authentic way, reflecting their diversity.

Likewise, audiences hugely value TV news. News from the PSBs and Sky remains a safe port of call for people seeking accurate, impartial insight in a volatile world, with disinformation and misinformation rampant online.

Global players also recognise the value of localising their content. Netflix has opened a commissioning base in London, with Paris and Madrid to follow. Amazon and YouTube are adopting similar strategies.

But if they want to commission programmes that are authentically British, these US firms will need to draw on the public-service traditions, regional bases and world-class talent that drive the content UK viewers demand.

They need programme-makers who understand our national heritage, tastes and perspective – and the standards expected by UK audiences, embodied in the Broadcasting Code.

By tapping into that demand, we believe our industry can draw on more international funding, and establish an even greater presence on the world stage.

When Amazon wanted to do King Lear, it turned to our national broadcaster – and its unrivalled experience of Shakespeare. Right now, the BBC is working with Netflix on Dracula.

Far from fearing the FAANGs, now is the opportunity to embrace them.

Already, Netflix and Amazon are major investment partners for UK television. Independent producers doubled their international revenue in eight years, through shows like Sherlock and Black Mirror. And the studio arms of our broadcasters stand to benefit from this investment.

Many companies, like ITV, are adopting a flexible approach – keeping exclusive content for its streaming service, but exploring production partnerships elsewhere.

Of course, every broadcaster will need its own strategy.

None of this is simple.

There are trade-offs at every turn.

Whether to prioritise exclusive rights, or the widest possible reach. Whether to sacrifice primary or secondary rights – internationally, or domestically – in return for co-funding.

And whether to become a distributor, commissioner, wholesale producer – or a combination of the three.

How these choices play out can complicate life for viewers.

Earlier this year I wanted to binge-watch all four series of the BBC’s Line of Duty. I needed access to Netflix and Amazon. In the end I gave up and went old school – I bought the box set on DVD.

I do not underestimate the complexities and funding choices faced by broadcasters.

But if the growth of Netflix and Amazon tells us one thing, it is that viewers will flock to single destinations that offer a wide variety of quality content.

Some might criticise them as ‘commissioning by numbers’. But it is a remarkably successful formula, especially with younger audiences.

Can our UK broadcasters achieve something similar?

Collaborating on distribution

Certainly, there has been talk of our PSBs combining their content – and pooling their appeal – through a single destination across smart TVs, phones and digital devices.

That would require significant investment, shared ambition, and taking a chance on success. Our broadcasters would need to reconcile their varied brands, audiences and funding models.

Some say it cannot be done. But many said the same of Freeview when it launched in 2002.

Yet Freeview turned out to be the fastest-growing electronics product in UK history.

Today’s challenges are different, of course. They are economic; structural; global. The pace of change is greater than ever.

But so, too, is the opportunity to reach more people.

The iPlayer, ITV Hub, All 4 and My5 have tens of millions of registered users between them. A common platform could combine the pulling power of Broadchurch, Blue Planet and Bake Off.

It would make it easier for viewers to access content across a range of devices, with a single login.

Sharing data could provide unprecedented insights for investors, commissioners and advertisers. It could place them at the forefront of the technological revolution that is transforming TV.

Nobody can question our broadcasters’ aptitude to innovate. But at the moment, they are taking different paths.

The BBC is planning more box-sets for the iPlayer. That could affect other broadcasters’ ability to compete, so the BBC must examine its impact properly and transparently.

The BBC has shown its ability to form a successful partnership with ITV through their joint streaming service in the US – BritBox. One wonders whether a ‘Brit Player’ for the UK could take off, potentially running alongside their existing brands.

As the national broadcaster, we’d expect the BBC to take the lead on forming such partnerships as it has done successfully to date.

And for our part, Ofcom has to be a forward-looking regulator that supports the future success of UK TV, firmly rooted in the online world.

PSB prominence

I want to end by considering how Ofcom can help PSBs remain easy to find online.

PSB channels should be easy to find in traditional programme guides, which is backed up by legislation. This remains important, but audiences are increasingly finding programmes outside of the guide – using players, recommendations and search – where no equivalent protections exist today.

The ability to stumble across great UK shows, that an algorithm might not suggest, seems a principle worth protecting in an online world.

That will need Parliament to pass legislation. And we will advise the Government next year on how prominence in an online world might be made to work.

Not everyone supports change. Sky and others argue that if PSB content is attractive to viewers, it will be in platforms’ interests to make it easy to find.

Some question how any regulation can keep pace.

Certainly, any new legislation would have to be based on principles that weren’t locked to a particular technology.

Who knows. A ‘PSB button’ might be vying for space next to Netflix and YouTube on the television remote control.

Conclusion

So we believe the future of British television – like its history – can be one of collaboration, adaptation and renewal.

The sea-changes of recent years will not be the last. Nor can anyone be sure what competition and technology lie over the horizon.

But while we cannot hold back the tide, our broadcasters can swim more strongly with it – by working together.